Malaysia Country Guide 2022

Malaysia

Malaysia is a country in Southeast Asia, with a tropical climate, fantastic beaches, and a fascinating colonial history. Life in Malaysia is generally easy, affordable, and low-stress; the locals are very friendly, and it has great infrastructure which is constantly expanding.

Malaysia has a lot of employment opportunities, and even though there are not too many social security benefits for foreigners unless they are a permanent resident, the costs for things like health care are low, and the quality is excellent.

  • Capital: Kuala Lumpur
  • Spoken Languages: Malay, English
  • Currency: Malaysian Ringgit (MYR)
  • Minimum monthly wage: MYR 1,200 (Gross)

Entry Visa

Citizens from a lot of countries, including most of Europe, can enter Malaysia for a short stay without a visa.

Work Permit / Residence Permit

In order to receive a Malaysian Work Permit (Employment Pass), an individual must have a highly skilled position, and a salary of at least MYR 3,000 per month. The employer must first get approval by the Expatriate Committee; after that, they need to apply for the work visa at the Immigration Department; when the work visa is granted, the employee will receive a visa approval letter, which will allow them to enter Malaysia. After arrival, the employee will get a work permit card at Immigration; this also works as a temporary residence permit.

Permanent Residence Permit

It is possible for foreign nationals to apply for a permanent residence, provided they are a highly skilled professional with at least 3 years’ seniority at a private company in Malaysia and are recommended by a Malaysian authoritative agency related to your field. Alternatively, there is also a point-based system for individuals who have lived in Malaysia with a valid work permit for several years, where points are scored for duration of employment, qualifications, investments, proficiency in the language and several other categories.

Social Security Registration

Employers in Malaysia are required to register their foreign employees with SOCSO (the country’s Social Security organization), in order to contribute to the Employment Injury Scheme; the employees will receive a Foreign Worker Social Security number.

Working Hours

A standard working week in Malaysia is either 8 hours/day for a 6-day working week, or 9 hours/day for a 5-day workweek. Employees are entitled to a 30 minute break after working any 5 consecutive hours.

Public Holidays

  • 01 January (New Year’s Day)
  • January – 2nd Monday (Coming-of-Age Day)
  • 11 February (National Foundation Day)
  • 23 February (Emperor’s Birthday – will change with new Emperor)
  • 20 or 21 March (Vernal Equinox Day)
  • 29 April (Showa Day – Golden Week)
  • 3 May (Constitutional Memorial Day – Golden Week)
  • 4 May (Greenery Day – Golden Week)
  • 5 May (Children’s Day – Golden Week)
  • July – 3rd Monday (Marine Day)
  • 11 August (Mountain Day)
  • September – 3rd Monday (Respect for the Aged Day)
  • 22 or 23 September (Autumnal Equinox Day)
  • October – 2nd Monday (Health and Sports Day)
  • November (Culture day, not a standard date)
  • 23 November (Thanksgiving Day)

Vacation Allowance

The amount of annual leave in Malaysia is dependent on the period of employment; individuals working for less than a year are not entitled to any leave.

Years WorkedLeave Amount (Days)
Over 1 and up to 28 days
Over 2 and up to 512 days
Over 516 days

Sick Leave

The amount of annual leave in Malaysia is dependent on the period of employment; individuals working for less than a year are not entitled to any leave. Employees must notify their employer within 48 hours, and should provide a medical certificate; if the illness requires hospitalization, the employee is entitled to up to 60 days of paid sick leave.

Years WorkedSick Leave Amount (Days)
Over 1 and up to 214 days
Over 2 and up to 518 days
Over 522 days

Maternity / Paternity leave

  • Maternity: 90 days, fully paid.
  • Paternity: 7 days, provided they have worked at the company for at least 12 months.

Termination & Severance

After employment termination, employees are entitled to a minimum statutory severance pay, which is dependent on the length of employment.

Years WorkedNotice Period
Under 2 years10 day’s wages per year of employment
Over 2 and up to 5 years15 day’s wages per year of employment
Over 5 years20 day’s wages per year of employment

Notice Period

Years WorkedNotice Period
Under 2 years4 weeks
Over 2 and up to 5 years6 weeks
Over 5 years8 weeks

Social Security

The majority of social security contributions in Malaysia are limited to Malaysian nationals and individuals with a Permanent Residence.

ContributionEmployerEmployeeNotes
Invalidity Pension Scheme (IPS)1.75%0.5%Only Malaysian nationals and Permanent Residents
EIIS (Employment Injury Insurance Scheme)1.25%0%For all employees
Capped at 49.40
Employee’s Provident Fund12 % (Income > MYR 5,000)
13 % (Income <= MYR 5,000)
MYR 5 per person for foreigners
11%Optional for foreigners without Permanent Residence
Employment Insurance System (EIS)0.2%0.2%Only Malaysian nationals and Permanent Residents

Pension

Public pension in Malaysia is covered by contributions to the Employee’s Provident Fund, which are only mandatory for Malaysian nationals and permanent residents; if a foreign individual opts to contribute as well, they are entitled to withdraw their savings if/when they decide to leave Malaysia.

Taxation

The Malaysian individual income tax year runs from 1 January to 31 December.

Tax Rates

The following progressive rates apply for 2022.

Chargeable Income (MYR)Rate (%)
0 – 5,0000%
5,001 – 20,0001%
20,001 – 35,0003%
35,001 – 50,0008%
50,001 – 70,00013%
70,001 – 100,00021%
100,001 – 250,00024%
250,001 – 400,00024.5%
400,001 – 600,00025%
600,001 – 1,000,00026%
1,000,001 – 2,000,00028%
2,000,001 +30%

Tax Returns

The annual income tax return must be filed electronically by 30 April of the following year.

Double Taxation

Malaysia has tax treaties with multiple other countries, which can reduce payable tax on certain incomes. If an individual pays foreign income tax in a country without a treaty, they are entitled to a tax credit in Malaysia of half the foreign tax paid.

Health Insurance

Since Malaysia does not have an official public health insurance program, foreigners living and working in Malaysia  are not eligible for subsidized rates at public health facilities.

Cost of Living

The cost of living in Malaysia is on the low side compared to many other countrues. The estimated monthly cost for a single person is around MYR 3,000 – 3,500 with 1,000 – 1,500 going to rent.


How We Can Help

We provide a full set of services in Malaysia allowing corporate clients, recruitment agencies and professional contractors to operate in an optimal manner while ensuring that all local employment obligations are taken care of.

Access Financial offers the following solution in Malaysia:

  • Employed/EOR Solution

If you would like to discuss how Access Financial can help in Malaysia, please contact us.

Disclaimer

WE HAVE PREPARED THIS AS A GUIDE ONLY; IT DOES NOT FORM PART OF AN OFFER. PLEASE REQUEST ILLUSTRATIONS BASED ON YOUR SPECIFIC CASE FROM ONE OF OUR SOLUTION MANAGERS.